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The telecommunications landscape has changed dramatically over the years, and as a consequence, operators have seen their traditional revenue models decimated by the rise of OTTs such as Skype, Facebook and WhatsApp. We’re now living in a digital economy and operators have recognized that they need to embrace digital transformation in an effort to survive.

Operators still have a number of huge advantages at their disposal and if they can devise a blueprint and plan strategically tailored to their market and customer needs then they can redress the slide in their operating profit.

Global strategy consulting business Strategy&, part of the PwC network is helping operators achieve their digital transformation aspirations. Telecom Review managed to secure an exclusive interview with Jad El Mir, Principal with Strategy& Middle East and a member of the Telecommunications, Media,Technology, and Digital practice during the Digital Transformation Middle East conference in Dubai.

In a brilliant interview, El Mir stated that it was imperative for operators to extract value from their core telecom business to invest into new growth industries and hence create multi-core businesses. In addition to this, he has called on operators to be focused in relation to which new growth areas they invest in - and explained what differentiates Strategy& from other rival consultancy firms in the Middle East region.

Telecommunication operators have seen their traditional business models decimated by the emergence of OTTs. However, can you tell us how its current performance is eroding overall shareholder returns, and what do operators need to do to redress this trend?

We can see that most telecommunication operators have been under pressure for a number of years. If you look at their financials globally and in the MENA region, you can see that revenues are decreasing. This is unsurprisingly putting a lot of pressure on their margins, so although they’re going through a lot of cost optimization in an effort to be able to reduce the effect of top line decreases in their margins, their margins are still squeezed.

In addition to this, you’ve got the growing demands from customers, be it consumers or enterprises that operators are serving. They’re asking for more and their needs are always evolving - and that ultimately means that operators have to sustain quite a significant CAPEX investment.

Everyone is thinking how do we make sure that we return to a growth mode in order to protect our shareholders returns? If you look and examine the strategies of most operators globally, they’re looking at how they can extract more value from their core business and free up cash to invest in new growth industries. There are a lot of examples on how operators are extracting more value from their core telecom business: managing value up through monetization programs, becoming leaner, and pursuing scale and scope. The most important aspect for operators is that they’re generating this value which is freeing up capital for them to invest in new growth areas. By investing in these new verticals and growth areas their aim is to create a multi-core business.

In your expert opinion, what growth areas do you think operators should focus on and invest in as part of their efforts to generate new revenues and business models?

There are a lot of areas and industries that operators can tap into and this will depend on their right to win assessment. The objective here is not to go after everything. Operators need to be focused. They need to select one or two areas which they believe will provide the most returns for them, and this is dependent on the needs of markets they’re currently serving and their current capabilities.

Operators need to look at whether or not these industries have already been disrupted in these markets or not, and whether they can leverage their capabilities to get into these industries. Naturally, IT services are the closet to the core telco business, and this is where you see a lot of the telcos venturing or expanding their portfolio by getting into select IT services. You can also see a lot of operators going after one or two other big industries, such as banking, healthcare and media. So these are some examples, but again what is important is that operators are focused and avoid attempting to go after everything.

Consumer demands have changed and they’ve become much more digitalized and sophisticated. With that in mind, how important is it for operators to become a one-stop-shop that provides these digital experiences for its customers?

It is very important for them because they have the biggest capabilities to become a one-stop shop. Naturally they’re the ones that everyone would think of first. This requires a lot of work from their side in order to build the capabilities that are required to be able to deliver a really digital experience for the customer that is in-sync with what large digital ventures are offering. Operators need to be able to combine all these different products into one ecosystem which they can then go with to their customers, be it enterprises or consumers.

Telco’s have a competitive advantage to diversify and hence create an ecosystem of digital services. They have relationship with a large customer base and they can leverage customer data to better target and enable new models. They’re trusted brands, their services can be a natural complement to new services and they mostly have the scale that is required to launch successful digital businesses.

There is a general consensus amongst operators that they didn’t monetize the opportunities in 3G or 4G in the way they would have imagined. What do operators need to do differently with 5G?

There has been a lot of discussion on this topic regarding 5G. Most of the operators are trying to see what are the different use-cases they have through 5G. Operators will then invest heavily to address their prioritized use-cases that they have determined will provide a return on investment. Operators don’t want to invest just for the sake of it. They want to establish which use-cases will work for them. When they decide on what use-cases they want to deliver through this technology, 5G will be able to support it.

Can you outline to us what your primary roles and responsibilities are as a Principal in the Telecommunications, Media, Technology and Digital practice at Strategy & are?

Strategy& is a global strategy consulting business, and I’m a Principal in the telecom, media, technology and digital practice. I work closely with telecom operators and digital players in the Middle East on large strategic and transformation projects across their full business value chain. .

In your role, you have to educate operators on why they need to embrace digital transformation. Has there been resistance to digital transformation from operators?

No, not at all. All operators are aiming to transform and digitize their business, and they’ve all realized that it is a key component of their strategy. Digital transformation is on the top of the agenda for CEOs. There has been no resistance at all. However, different operators are at different maturity levels in relation to their digital transformation objectives, but everyone collectively realizes this is a key mandate for them in order to provide the services their clients expect them to be able to deliver.

What is that differentiates Strategy& from its competitors, and why should operators choose Strategy& to help them deliver on their digital transformation goals?

What differentiates us as Strategy& is that we deliver strategy, made real. We are the only at-scale strategy business within a global network that takes a bold and pragmatic approach to strategy. We don’t just talk strategy. We help our clients execute their goals and objectives by working with them hand in hand. We’re realistic with our clients and devise a tailored plan and strategy which is based on things that can be delivered. We work closely with them to make sure that the strategy we recommend is executable and drives results.

Can you tell us what your objectives and goals are for 2019?

Our plan for the next twelve months is to continue to provide support to operators in all of their strategic business needs and strategic decisions. It is our objective to work with them in their efforts to achieve their vision, and we need to help them deliver on that – and this is something we will be fully focused on.